CBDC, or central bank digital currency, has immense potential in reducing cross-border transaction costs. While many experts have claimed so for a long time, a new report from JPMorgan brings legitimacy to the claim. The report is titled Unlocking $120 Billion Value in Cross-Border Payments. JPMorgan, along with consultancy firm Oliver Wyman, jointly published the report.
The report reveals some interesting data about the future of CBDCs, and how they can cut down costs significantly for all multinational corporations. One of the key challenges in running a cross-border business is to facilitate fast transactions. Regulatory bodies often charge an exorbitant amount to process these payments. The delay caused by all such processes leads to additional financial loss for such companies. Apart from CBDCs, no other payment medium offers a full-proof solution to this problem. The recent report by JPMorgan reconfirms the notion that CBDCs holds immense potential in the future of money transfers.
The report claims that a global network of central bank digital currencies can save companies approximately $100 billion every year. Every year, around $25 trillion is spent on cross-border transactions. Out of this $25 trillion, almost $120 billion is spent on transaction charges alone. A global network of CBDC would cut down on these $120 billion transaction charges. As a consequence, companies will save significant amounts of money over the long term. As more and more countries are actively looking into CBDCs, we might indeed be inching towards a global network of central bank digital currencies. JPMorgan’s report is set to add urgency to these developments.